The New Urban Crisis

This brings us face to face with both the central element of the New Urban Crisis and the central contradiction of contemporary capitalism. The clustering force is at once the main engine of economic growth and the biggest driver of inequality. The concentration of talent and economic activity in fewer and fewer places not only divides the world’s cities into winners and losers, but ensures that the winner cities become unaffordable for all but the most advantaged. This unrelenting cycle is great news for wealthy landlords and homeowners, but bad news for almost everyone else.

But the reality is that the outsized gains to capital have accrued more from increased real estate values than from returns to assets like stocks and bonds.

the exorbitant real estate prices in superstar cities and tech hubs are a key factor, if not the key factor, in the staggering rise in economic inequality across the world.

he picture looks very different when the three classes are broken out individually. While advantaged creative-class workers make more than enough to cover their increased housing costs, working-class and service-class workers are worse off

Geography ultimately plays an even bigger role than land use restrictions in housing prices, according to a 2010 study by Massachusetts Institute of Technology economist Albert Saiz. Even when such geographically constrained places as New York, San Francisco, LA, and Boston have restrictive land use policies, geography is the key factor in the extraordinary run-up of their housing prices

n fact, the cities that have seen significant population growth in their already-built-up areas in and around their urban centers are those that have hit such geographic limits to outward expansion—cities like New York, Chicago, the San Francisco Bay Area, LA, and Miami.

Metros in the upper left-hand quadrant, such as San Francisco, New York, LA, Seattle, and Washington, DC, have high housing prices and have seen relatively little residential expansion. Metros in the lower right-hand quadrant, including Las Vegas and Atlanta—as well as the tech hub of Austin, and Raleigh in the North Carolina Research Triangle—have

The fact of the matter is that the urban land nexus is shaped by an even more powerful and immutable constraint than just land use restrictions—that of basic geograph

high-end luxury housing, and very little, if any, of the truly affordable housing these superstar cities need. On the other hand, there is a tipping point where too much density can actually deaden neighborhoods.

Combine the high costs of land with the high costs of high-rise construction, and the result is mor